Is Fairfield Greenwich Shutting Down?*

*Updated: This morning we were told by a reliable source that the Fairfield Greenwich Group is finally shutting down. Now others familiar with the matter say they aren’t closing and continue to manage their non-Madoff funds.

The fund of funds hedge fund made and lost its reputation and fortune by putting investor money into the hands of the world’s greatest swindler, Bernie Madoff. Once Madoff’s scam was revealed, it seemed to us that it was only a matter of time before FGG went belly up.

Today rumours began circulating that the end had finally arrived. Our first version of this item noted that a single source had told us that FGG was closing up shop. Now, however, we’ve been able to learn that FGG lives on, continues to manage investor money and is cooperating with the authorities in the Madoff investigation.

It’s very strange that these conflicting stories are circulating. It seems that even within FGG, employees are not certain about whether the company will continue to operate.

At one point, FGG had invested something like $14.1 billion of investor money. It claimed that just about half, $6.9 billion, was invested with Madoff. Investor withdrawals, however, have just about wiped out FGG. We’re told that their total assets under management are down to a tiny fraction of the non-Madoff money. The Madoff money, obviously, is gone.

To be honest, we’re surprised by the news that FGG continues to operate as a a fund of funds. n. They were mostly a conduit, taking money from investors and handing it over for others to manage, skimming some fees for the effort. Obviously, no one is going to give them a dime now. We suspect that a good part of the business now involves sorting out various investor claims, having lots of meetings with lawyers and being interviewed by regulators and law enforcement.